Obama:"I Screwed Up" on Daschle, Killefer

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Treasury Secretary Timothy Geithner, performance czar nominee Nancy Killefer and Daschle have all come under fire for their suspect tax filings -- a the trend does not help Obama, who is trying to carve out an era of change and transparency within the White House.

Barack Obama abruptly abandoned his nomination fight for Tom Daschle and a second major appointee who failed to pay all their taxes, fearing a lingering ethics dispute would undercut his claims to moral high ground and cripple his presidency in just its second week.

"I screwed up," Obama declared.

"It's important for this administration to send a message that there aren't two sets of rules — you know, one for prominent people and one for ordinary folks who have to pay their taxes," Obama said near the end of a day of jarring developments, little more than 24 hours after he had said he was "absolutely" committed to Daschle's confirmation.

"I'm frustrated with myself, with our team. ... I'm here on television saying I screwed up," Obama said on NBC's "Nightly News with Brian Williams." He repeated virtually the same words in interviews with other TV anchors.

Team Obama

Faced with problems over back taxes and potential conflicts of interest, Daschle withdrew his nomination on Tuesday to be President Barack Obama's Health and Human Services secretary.

His stunning statement came less than three hours after another Obama nominee withdrew from consideration, also because of tax problems. Nancy Killefer, nominated by Obama to be the government's first chief performance officer, said she did not want her bungling of payroll taxes on her household help to be a distraction.

Daschle told NBC News that he had an emotional conversation with President Obama this morning when he called the commander after reading the New York Times editorial that called on him to withdraw his nomination because of his failure to pay back taxes and potential conflicts of interest.

"I read the New York Times," Daschle told NBC's Andrea Mitchell. "I can't pass health care if it's too much of a distraction ... so I called the President this morning."

The White House today said the two nominees for administration jobs recognized their tax problems made it impossible for them to meet a new standard for responsibility.

White House press secretary Robert Gibbs told reporters they two realized "that you can't set an example of responsibility but accept a different standard of who serves."

Gibbs said the nominees didn't want to be distractions to President Barack Obama's agenda.

Daschle was the third high-profile Obama nominee to bow out. Obama initially had tapped Bill Richardson to be Commerce secretary, but the New Mexico governor withdrew amid a grand jury investigation into a state contract awarded to his political donors.

Obama, Vice President Joe Biden and Daschle's former Democratic colleagues in the Senate had rallied to his defense in the aftermath of questions about his failure to pay fully his taxes from 2005 through 2007. Last month, Daschle paid $128,203 in back taxes and $11,964 in interest.

It eventually proved too bitter a pill for senators to swallow, however, even for one from their own club, after only last week confirming Timothy Geithner as treasury secretary despite his own tax-payment problems. Tax issues are easy for constituents to understand, and easy at a time of their own serious money problems to resent in wealthy public officials.

The daily controversy also has been taking a hit on Obama's promise to run a more ethical, responsible and special interest-free administration than ever before.

This despite the close personal friendship between Obama and Daschle. Aides say the two grew closer over the course of the 2008 campaign and transition. Many of Obama's senior and junior aides have their roots in Daschle's political circle, having worked for the South Dakotan's campaigns or in the Senate when he was majority leader.

After Daschle asked to have his name pulled, Obama issued a written statement that praised Daschle but said, "Now we must move forward." A day earlier, Obama had said he "absolutely" stood by his nominee.

Daschle said in his request to be withdrawn that he would have not been able to operate "with the full faith of Congress and the American people."

"Tom made a mistake, which he has openly acknowledged," Obama said. "He has not excused it, nor do I. But that mistake and this decision cannot diminish the many contributions Tom has made to this country."

Daschle also was facing questions about potential conflicts of interests related to speaking fees he accepted from health care interests. Daschle also provided advice to health insurers and hospitals through his post-Senate work at a law firm.

The withdrawal came after Republicans and major newspapers had been questioning Obama's initial decision to stick with Daschle.

Republican Sen. Jim DeMint said Obama was "losing credibility" with his statements in support of Daschle. "Part of leadership is recognizing when there has been a mistake made and responding quickly," the Republican said.

In an editorial, The New York Times described Daschle's ability to move "cozily between government and industry" as a cloud over any role he might play in changing the nation's health care system.